September 20th, 2005

Complaint / Real Estate Appraiser

Filed against Terry Ruth

Colorado Board of Real Estate Appraisers
1900 Grant St, #600
Denver, CO 80203
Attn: Enforcement

Re: My File Number – 5050
Subject Property: 4805 E Kansas Dr, Denver, CO 80246

This is a complaint against Terry Ruth, License number AL40011228.

I have not contacted the appraiser. This matter is not under litigation.

Comments:

The appraisal report does not state the identity of the intended users, by name or type -- this is a violation of USPAP Standards Rule 2-2(b)(i) and SMT-9.

The appraisal report does not state the intended use of the appraisal -- this is a violation of USPAP Standards Rule 2-2(b)(ii) and SMT-9.

There is no scope of work statement – this is a violation of USPAP Standards Rule 2-2(b)(vii)

The report does not address “reasonable exposure time” – this is a violation of USPAP Standards Rule 1-2(c) comment, SMT-6, AO-7, AO-8, and item (3) in the definition of market value.

The appraisal report states the subject is not on a corner lot. This is factually incorrect, because the subject property is on the corner of Dahlia and Kansas. Dahlia is a semi busy street, and this has an adverse effect on market appeal.

Pursuant to USPAP Standards Rule 1-5(a) and 2-2(b)(ix), the appraiser is required to review and analyze the contract and the listing (market exposure) and to “summarize the information analyzed, the appraisal procedures followed, and the reasoning that supports the analyses, opinions and conclusions.”

Pursuant to USPAP AO-1, the appraiser must take into account the listing, the agreed price, and the pending sale of the subject. The appraiser’s failure to analyze these facts may exclude important information....(See AO-1, lines 32-39).

Pursuant to USPAP Standards Rule 1-5(a) and 2-2(b)(ix), if a copy of the contract was unobtainable, a statement on the efforts undertaken by the appraiser to obtain a copy of the contract is required. If the contract is irrelevant, a statement acknowledging the existence of the information and citing its lack of relevance is required. It is unclear if the appraiser (Terry Ruth) reviewed a copy of the contract. If he did not review a copy of the contract, the required statement is not in the report.

If he did review a copy of the contract, the report violates the USPAP requirement to “summarize the information analyzed and appraisal procedures followed”, i.e., clearly state that he did review a copy of the contract.

The report states:

“The down payment assistance has been considered in the report, and it has no adverse effect on the value of the home. The subject was listed at $199,900.”

This is inadequate and /or misleading. My dictionary defines “Analysis” as an examination of the parts to find out their nature, proportion, interrelationship, etc. A detailed examination. A statement of the results of this process.

How could Terry Ruth conclude that the market value was $210,000 when it was obvious (after 129 days on market) that you, I, or anyone else could have bought the property for $199,900? There is no answer in the report.

USPAP AO-1 requires the appraiser to consider the pending sale of the subject. Typing the words.... “down payment assistance has been considered” does not (in and of itself) constitute compliance.

The plain meaning of USPAP 2-2(b)(ix) requires that the report provide sufficient detail for the intended user(s) to understand the reasoning and the rationale for how the market value could be higher than the publicly stated asking price. Common sense dictates that there needs to be some stated reason, and the reason must be plausible. The unsupported conclusion (i.e., “has no adverse effect”) is misleading at best.

There is no mention of the appraisal procedures followed – this is a violation of USPAP Standards Rule 1-5(a) and 2-2(b)(ix). There is no analysis of the sales contract, there is no mention of the subject days on market. There is no analysis of the subject listing or market exposure. There is no reasoning and there is no rationale – this is a violation of USPAP Standards Rule 1-5(a) and 2-2(b)(ix).

Certification:

I certify that the statements and information supplied by me in this complaint including the attachments are true and correct to the best of my knowledge and belief.

Philip G Rice
11268 E Linvale Dr
Aurora, CO 80014
720-282-3376

Attachments:

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